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Terms of sale (Incoterms), let's make it simple


Terms of Sale, or "Incoterms", are international standards that define the shipping rights and obligations of the parties in international transactions. The main goal is to clearly define the obligations of the seller and buyer, thereby avoiding misunderstandings and problems during the completion of the transaction. Under these conditions, we will examine the terms of sale "EXW" and investigate why the purchase of goods at the "factory gate" will contribute to businesses working properly.


Types of Terms of Sale:

  1. EXW (Ex Works- from the factory gate - place of production): Following the terms of this sale, the seller transmits the goods to the buyer from his place of production. This means that the buyer is responsible for transportation, security, and all customs expenses in the country of origin. The responsibility and commitment of the seller to logistics relations and supervision of the goods weaken here.

  2. FOB (Free on Board): The seller is responsible for the goods until they arrive on the ship at the port of export, including loading costs. From the ship onwards, the responsibility for shipping passes to the buyer.

  3. CIF (Cost, Insurance, Freight): The seller is responsible for transporting the goods and all their expenses to the port of import in the destination country. In addition, the seller provides insurance on the goods at the time of delivery.

  4. DDP (Delivered Duty Paid- delivered for payment after all taxes have been paid): The seller is responsible for all shipping costs and taxes and will deliver the goods to the destination place in the buyer's country

Why work in EXW sales conditions?

  1. Total control: Businesses working under EXW conditions will have total control over all processes, logistics connections, and operations.

  2. Cost savings: The buyer can choose the specific details he can save, and will not be required to pay for all the ancillary services offered by the supplier.

  3. Flexibility in choosing service providers: The buyer can choose the service providers that will take into account several different criteria, such as price, reliability, and availability.

  4. Improved productivity: The buyer receives the goods from a source close to the destination place, thus developing his productivity capacity and shortening delivery times.

  5. Risk reduction: The buyer pays only for the processes and services they consider relevant, which can sharply reduce potential risks.


In conclusion, businesses that choose to operate according to EXW sales terms will be able to enjoy full control, cost savings, and flexibility in choosing service providers. These terms of sale allow businesses to focus on providing the products or services in the way that best suits them, thereby improving their competitiveness and stability in the international market.

 

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